July 26, 2021 – July 30, 2021
Market Performance For The Week
Disclaimer: Past performance is no guarantee of future performance
The Good News
Earnings of both large and small companies are coming in above expectations.
GDP price index reaches a 40-year high.
The GDP price index is up 6% at an annual pace, the most since the 1980s, as @AnsteyAsia notes. pic.twitter.com/VejrZsOtSb
— Lisa Abramowicz (@lisaabramowicz1) July 29, 2021
The Bad News
But 2Q GDP came in below expectations.
Quite the miss (by economists) for 2Q GDP, which expanded at +6.5% (q/q ann.) vs. +8.5% est. & +6.4% in prior quarter … level has passed pre-pandemic peak … more details shortly pic.twitter.com/ZcujjXz9J2
— Liz Ann Sonders (@LizAnnSonders) July 29, 2021
The 6.5% #GDP growth number was exceptionally weak. Earlier this year, I had debates with several high-profile #economists who were expecting double-digit growth. In April, the #AtlantaFed expected 13.5%. #Debt funded #stimulus does not create real #growth. pic.twitter.com/MCZ0P1V14S
— Lance Roberts (@LanceRoberts) July 30, 2021
As are a lot of announcements these days. There are now more economic announcements missing expectations than beating.
And inflation numbers came in hot, again.
The US core PCE inflation jumped 6.1% in the second quarter, the biggest quarterly increase since the early 1980s. ???????????? pic.twitter.com/VY3kb4DNAF
— Win Smart, CFA (@WinfieldSmart) July 30, 2021
The State Of The Market
The market has been on a rather good run.
The fastest doubling on record!
We are close to a doubling of the S&P 500 Index since the low in March last year. If realized, it would be, by far, the fastest doubling of US #equities on record.
The Daily Insight: https://t.co/KDbYQylBOv
chart @RyanDetrick pic.twitter.com/kJ5oMkc2yB
— jeroen blokland (@jsblokland) August 2, 2021
S&P 500 up more than 17% YTD, more than double the average annual gain since 1957, and a percentage point higher than the average of all positive years – @sherifa_issifu pic.twitter.com/6jn6Ee3zYV
— Sam Ro ???? (@SamRo) July 30, 2021
But seasonal trends are not in our favor.
Though spending in the aggregate remains strong and above trend.
And incomes remain above trend. But they are coming off of stimulus induced highs, which may weigh on spending going forward.
Upside surprise for June personal income, +0.1% vs. -0.3% est., though prior month revised down from -2% to -2.2% … personal spending +1% vs. +0.7% est. & -0.1% in prior month (rev down from 0%) … real personal spending +0.5% vs. +0.3% est. & -0.6% prior (rev down from -0.4%) pic.twitter.com/b39BKV7F4L
— Liz Ann Sonders (@LizAnnSonders) July 30, 2021
Especially if US consumers have already spent most of their savings.
Personal savings rate dipped to 9.4% in June, down from 10.3% in May … now at lowest since February 2020 pic.twitter.com/uCWFENMhDM
— Liz Ann Sonders (@LizAnnSonders) August 2, 2021
Maybe Amazon is giving us a heads-up, or maybe consumers are just shifting their spending to other segments of the economy.
But many will probably buy the dip, if there ever is one.
Charts Of The Week
This along with the S&P 500 divided by the Fed Balance Sheet are my favorite charts.
Interest rates since 3000BC pic.twitter.com/PNZhBOkNvB
— Mike Zaccardi, CFA, CMT (@MikeZaccardi) July 30, 2021
IG corporate yield in real terms lowest since ‘80 – @SoberLook @ISABELNET_SA @BofAML pic.twitter.com/zHLRk09LjB
— Rob Hager (@Rob_Hager) August 3, 2021
From @McKinsey pic.twitter.com/GtzHWMLcPf
— Mohamed A. El-Erian (@elerianm) August 1, 2021
Mapped: Visualizing the True Size of Africa ????https://t.co/BSwfaChT0X pic.twitter.com/lvxdTysxq0
— Visual Capitalist (@VisualCap) August 2, 2021
Wait, who has the reserve currency again? ???? pic.twitter.com/ZSXnPE9c9z
— Win Smart, CFA (@WinfieldSmart) July 18, 2021
Market cap of stocks with price/sales ratio > 20x ???? Draw your own conclusions. Ht @KailashConcepts pic.twitter.com/IZGHQoI5FP
— M. A. Arouet (@MichaelaArouet) August 2, 2021
Poverty in the U.S this year is projected to fall by 45% from 2018 — nearly three times the previous three-year record, according to historical estimates by researchers at Columbia University. https://t.co/hGyb3LNAtB pic.twitter.com/jRAjUuv3vX
— The New York Times (@nytimes) July 30, 2021
Story Of The Week
The pandemic caused a housing boom seemingly everywhere, not just the US: https://www.ft.com/content/491a245d-4af7-4cad-b860-6ba51b86b45f
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